Applying Statistical Methods to Compare Frontiers: Are Organic Dairy Farms Better Than the Conventional?

Mette Asmild*, Dorte Kronborg, Anders Rønn-Nielsen

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

Abstract

The Malmquist index is widely used in empirical studies of productivity change over time. The index is based on estimates of the frontier obtained from the convex envelopment of the data as in DEA. The statistical properties of the Malmquist index and its components, i.e. the frontier shift and the efficiency change, have until recently only been subject to a limited number of studies. The asymptotic properties of the geometric mean of the individual Malmquist indexes have been studied in the literature. Permutation tests for performing statistical inference in finite samples have recently been proposed and are easily performed. In the present paper we illustrate the permutation methods by an analysis of data comprising organic and conventional dairy farms in Denmark from 2011–2015. Further, differences between the frontiers of the production possibility sets for two separate samples are studied, specifically those of the organic and the conventional producers. We suggest to use jackknife methods when estimating the differences to ensure that these are not affected by the well-known bias originating from estimation of the frontier. In summary, the paper offers an illustration of how to analyse productivity data, in particular a comparison of two independent groups, and furthermore an analysis of how the separate groups evolve over time is provided.
Original languageEnglish
Title of host publicationAdvances in Efficiency and Productivity Analysis. NAPW 2018
EditorsChristopher F. Parmeter, Robin C. Sickles
Number of pages14
Place of PublicationCham
PublisherSpringer
Publication date2021
Pages335-348
ISBN (Print)9783030471057
ISBN (Electronic)9783030471064
DOIs
Publication statusPublished - 2021
EventNorth American Productivity Workshop X. NAPW 2018 - University of Miami, Miami, United States
Duration: 12 Jun 201815 Jun 2018
Conference number: 10
https://www.bus.miami.edu/thought-leadership/business-conferences/napw/2018/index.html

Workshop

WorkshopNorth American Productivity Workshop X. NAPW 2018
Number10
LocationUniversity of Miami
CountryUnited States
CityMiami
Period12/06/201815/06/2018
Internet address
SeriesSpringer Proceedings in Business and Economics
ISSN2198-7246

Bibliographical note

Published online 22 October 2020.

Keywords

  • Malmquist index
  • Frontier differences
  • Data envelopment analysis (DEA)
  • Independent samples
  • Permutation tests
  • Organic farming

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